Question

On December 31, Year 1, Elm Village paid a contractor $4,500,000 for the total cost of a new Village Hall built in Year 1 on Village‐owned land. Financing for the capital project was provided by a $3,000,000 general obligation bond issue sold at face value on December 31, Year 1, with the remaining $1,500,000 transferred from the General Fund. What account and amount should be reported in Elm's 2005 financial statements for the General Fund?

Answer 1

Answer:

D. Other financing uses control

$1,500,000

Explanation:

Given that

Total cost of a new village hall = $4,500,000

Transferred balance = $1,500,000

Issue of bond sold at face value = $3,000,000

By considering the above information, the account and amount reported for the General fund is as follows

The transferred balance i.e $1,500,000 is shown in the other financing uses control account which denotes the operating transfer and the $3,000,000 should be recognized as a fund for capital project in a other financing sources control account